Notes
to Condensed Consolidated Financial Statements
March
31, 2014 and December 31, 2013
(Unaudited)
NOTE
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The
accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and
cash flows at March 31, 2014, and for all periods presented herein, have been made.
Certain
information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2013
audited financial statements. The results of operations for the periods ended March 31, 2014 and 2013 are not necessarily indicative
of the operating results for the full year.
NOTE
2 - GOING CONCERN
The
Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable
to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.
The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue
as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital
to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced
to cease operations.
In
order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan
is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet
its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that
the Company will be successful in accomplishing any of its plans.
The
ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described
in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying
financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE
3 - SIGNIFICANT ACCOUNTING POLICIES
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ
from those estimates.
TIGER
OIL AND ENERGY, INC.
(An
Exploration Stage Company)
Notes
to Condensed Consolidated Financial Statements
March
31, 2014 and December 31, 2013
(Unaudited)
NOTE
3 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent
Accounting Pronouncements
Management
has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s
management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
Cash
and Cash Equivalents
Cash
and cash equivalents include cash in banks and financial instruments which mature within three months of the date of purchase.
Fair
Value of Financial Instruments
As
at March 31, 2014, the fair value of cash, accounts receivable, accounts payable and notes payable approximate carrying values
because of the short-term maturity of these instruments.
Oil
and Gas Properties
The
Company uses the full cost method of accounting for oil and natural gas properties. Under this method, all acquisition, exploration
and development costs, including certain payroll, asset retirement costs, other internal costs, and interest incurred for the
purpose of finding oil and natural gas reserves, are capitalized. Internal costs that are capitalized are directly attributable
to acquisition, exploration and development activities and do not include costs related to production, general corporate overhead
or similar activities. Costs associated with production and general corporate activities are expensed in the period incurred.
Proceeds from the sale of oil and natural gas properties are applied to reduce the capitalized costs of oil and natural gas properties
unless the sale would significantly alter the relationship between capitalized costs and proved reserves, in which case a gain
or loss is recognized.
Capitalized
costs associated with impaired properties and capitalized costs related to properties having proved reserves, plus the estimated
future development costs, and asset retirement costs under Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) Topic 410 “Asset Retirement and Environmental Obligations” (FASB
ASC 410), are amortized using the unit-of-production method based on proved reserves. Capitalized costs of oil and natural gas
properties, net of accumulated amortization and deferred income taxes, are limited to the total of estimated future net cash flows
from proved oil and natural gas reserves, discounted at ten percent, plus the cost of unevaluated properties. Under
certain specific conditions, companies could elect to use subsequent prices for determining the estimated future net cash flows.
The use of subsequent pricing is no longer allowed. There are many factors, including global events that may influence the production,
processing, marketing and price of oil and natural gas. A reduction in the valuation of oil and natural gas properties resulting
from declining prices or production could adversely impact depletion rates and capitalized cost limitations. Capitalized costs
associated with properties that have not been evaluated through drilling or seismic analysis, including exploration wells in progress
at March 31, 2013, are excluded from the unit-of-production amortization. Exclusions are adjusted annually based on drilling results
and interpretative analysis.
TIGER
OIL AND ENERGY, INC.
(An
Exploration Stage Company)
Notes
to Condensed Consolidated Financial Statements
March
31, 2014 and December 31, 2013
(Unaudited)
NOTE
3 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Oil
and Gas Properties (Continued)
Sales
of oil and natural gas properties are accounted for as adjustments to the net full cost pool with no gain or loss recognized,
unless the adjustment would significantly alter the relationship between capitalized costs and proved reserves. If it is determined
that the relationship is significantly altered, the corresponding gain or loss will be recognized in the statements of operations.
Costs
of oil and gas properties are depleted using the unit-of-production method. For the three months ended March 31, 2014, the Company
recognized $-0- of depletion expense related to oil and gas production during the period.
Ceiling
Test
In
applying the full cost method, the Company performs an impairment test (ceiling test) at each reporting date, whereby the carrying
value of property and equipment is compared to the value of its proved reserves discounted at a ten percent interest rate of future
net revenues, based on current economic and operating conditions, plus the cost of properties not being amortized, plus the lower
of cost or fair market value of unproved properties included in costs being amortized, less the income tax effects related to
book and tax basis differences of the properties. During the three months ended March 31, 2014 and the twelve months
ended December 31, 2013, the Company had recorded $-0- and $-0- of impairment expense, respectively, in connection with the full
cost ceiling test calculation.
Revenue
Recognition
Revenues
from the sale of oil and natural gas are recognized when the product is delivered at a fixed or determinable price, title has
transferred, and collectability is reasonably assured. For oil sales, this occurs when the customer takes delivery of oil
from the operators’ storage tanks.
NOTE
4 - OIL AND GAS PROPERTIES
Oil
and gas properties are stated at cost. The Company recognized impairment expense totaling $65,540 during the year ended December
31, 2013. As of March 31, 2014 and December 31, 2013 oil and gas properties consisted of the following:
|
|
March 31, 2014
|
|
December 31, 2013
|
|
|
|
|
|
Unproved properties
|
|
$
|
65,540
|
|
|
$
|
65,540
|
|
Impairment of oil and gas leases
|
|
|
(65,540
|
)
|
|
|
(65,540
|
)
|
|
|
|
|
|
|
|
|
|
Net oil and gas properties
|
|
$
|
—
|
|
|
$
|
—
|
|
TIGER
OIL AND ENERGY, INC.
(An
Exploration Stage Company)
Notes
to Condensed Consolidated Financial Statements
March
31, 2014 and December 31, 2013
(Unaudited)
NOTE
5 - CONVERTIBLE NOTES PAYABLE
On
January 3, 2014, the Company received $600
,000
in connection with the convertible note financing commitment disclosed in Note 7, the terms of which call for the Company to receive
three tranches of $200,000 each on a callable convertible note wherein the Company borrows the sum at 5% interest for one year
and the investor can elect to continue to receive the interest on the note or have the Company issue the investor shares of common
stock of the Company at $0.50 per share to retire the debt.
The
Company analyzed the convertible debts under ASC 470-20 and determined that a beneficial conversion feature existed at note execution.
The intrinsic value of the beneficial conversion feature was determined to be $400,000 and was recorded as additional paid-in
capital with an offset to debt discounts. During the year ended December 31, 2013, $95,342 of the debt discount was amortized
to interest expense, leaving an ending balance of debt discounts of $304,658. No beneficial conversion feature was calculated
to be present upon execution with respect to the $200,000 tranche of funds received.
NOTE
6 - STOCKHOLDERS’ DEFICIT
The
Company has 1,000,000 preferred shares authorized at a par value of $0.001 and 74,000,000 common shares authorized at par value
of $0.001. As of March 31, 2014 and December 31, 2013 the Company has 42,013 shares of preferred stock and 42,728,159 shares of
common stock issued and outstanding. The following is a list of the Company’s common stock issuances for the three months
ended March 31, 2014 and for the years ended December 31, 2013 and 2012:
On
June 12, 2012, the Company cancelled 10,000,000 shares of common stock held by a corporate officer, due to his resignation from
his position with the Company.
NOTE
7 - COMMITMENTS AND CONTINGENCIES
On
December 8, 2013, the Company has signed an election to participate in the first of three wells with TOTO Energy LLC in Cowley
County Kansas. The Company will earn a 30% working interest and a 24.45% net royalty interest in the well. Cost of the first well
has increased to $630,000 because of the cold weather for drilling and fracking each well with the Company’s cost of 30%
to be $189,000 per well and will be scheduled for early spring.
On
December 12, 2013, the Company secured a commitment from an unrelated party for the $600,000 required to proceed with drilling
plans for the Cowley County KS in partnership with TOTO Energy, LLC. The Company will earn up to a 30% working interest and a
24.45% net royalty interest in the wells drilled and fracked.
The
terms of the agreement call for the Company to receive three tranches of $200,000 each on a callable convertible note wherein
the Company borrows the sum at 5% interest for one year and the investor can elect to continue to receive the interest on the
note or have the Company issue the investor shares of common stock of the Company at $0.50 per share to retire the debt.
TIGER
OIL AND ENERGY, INC.
(An
Exploration Stage Company)
Notes
to Condensed Consolidated Financial Statements
March
31, 2014 and December 31, 2013
(Unaudited)
NOTE
8 - SUBSEQUENT EVENTS
On April
1, 2014, the Company made its first payments to TOTO Energy, LLC to commence operations in the aforementioned development. The
payment consisted of $24,000 for the land lease, and $189,000 for estimated costs of operations, comprising their 30% working
interest in the development.
In
accordance with ASC 855-10, Company management reviewed all material events through the date of this report and there are no other
material subsequent events to report.